Boeing’s Speed Problem

Last week’s New York Times expose on claims of shoddy production in Boeing’s North Charleston factory put the aerospace manufacturer in the news again. Specifically, too many of the planes were found to have debris—including metal slivers—dangerously close to wiring beneath cockpits. A worker interviewed for the article says that when he brought up concerns about this to management, nothing was done other than to move him to another part of the plant. Qatar, a major customer, had in fact notified Boeing that they wouldn’t accept shipments of 787 Dreamliner planes from this facility.

The same problem has also been seen in Boeing’s Everett, Washington, plant. Again, the U.S. Department of Defense has stopped accepting KC-46 Tanker planes until Boeing shows it has solved the debris problem, which included tools, bolts and trash.

In both of the above instances, Boeing production employees have said that the leaders at these two plants put production output above all else. Why? Because at least in the case of the Dreamliner, Boeing is years behind schedule in deliveries.

In my March 22 column, I wrote about trading vs. mitigating risk, conjecturing that Boeing’s ‘plug and play’ attitude toward suppliers and regard for competitive pricing over institutional knowledge played a role in the two Boeing 737 Max crashes.

The debris problem may be another example of placing production numbers above relationships, problem-solving and quality. Boeing, however, argues that production output, quality and safety are all priorities and can be maintained.

How does this relate to a supply chain?

In their groundbreaking book The Goal (Goldratt and Cox) the authors describe a troop of hikers that continually lengthens because the front of the line is able to trudge faster than the hikers behind them. And Herbie, who is at the end of the line, is the slowest hiker of all. So the whole line has to stop every so often to let the laggards close up with the others.

After a while, the kids in front get frustrated and tell the slower kids behind them to “speed up.” Wanting to keep the line closed up, the troop’s chaperone puts Herbie at the front of the line, eliminating the need for the periodic stops.

Again, the faster walkers behind Herbie start complaining about Herbie being too slow. The chaperone tells the troop that if they want Herbie to speed up, they’ll have to figure out a way for that to happen without just expecting Herbie to walk faster. So they put some thought into things and check Herbie’s pack, finding things that were not needed for a day hike—causing his pack to be, by far, the heaviest in the troop. And when they lighten his load by distributing parts of it to some of the faster hikers, Herbie is able to speed up his pace.

Sounds familiar. When specific processes of a production line hold up the rest, the solution coming down from management is quite often, “work quicker.” I don’t know if that’s what’s happening at Boeing, but it sounds like that may be part of the problem.

This type of operational management has an even greater effect on the supply chain due to the bullwhip effect described by Goldratt and Cox. In other words, when an Original Equipment Manufacturer operates like the complaining hikers, driven for speed above all else, every person—every link—in the supply chain has to react to ensure continual order fulfillment as their customer needs restocking.

I don’t know if unrecognized bottlenecks are at the foundation of Boeing’s problems, but if they are, they are also causing untold scheduling problems in each tier of the supply chain. And if the issue is not bottlenecks, then Boeing is expecting employees to continually take heroic action in order to support their schedule.

Tariffs, Yet Again

I recently bemoaned the fact that the current U.S. trade strategy is to treat all countries the same relative to tariffs. Now there is a new potential tariff to consider.

An April 17 IndustryWeek article notes that the European Union has prepared a list of tariff targeted items they currently impact from the United States. The EU retaliation plan follows a U.S. threat to seek $11 billion in damages through duties on European goods ranging from helicopters to cheeses, to counter what it perceives as “state aid” to the French airline manufacturer Airbus SE. Both moves stem from a 14-year-old, unresolved dispute between Boeing and Airbus SE at the World Trade Organization (WTO) over market-distorting subsidies to aircraft makers.

Here we go again. The U.S. threatens tariffs and subject of the tariff promises tit-for-tat reaction. If the U.S. does impose these new tariffs, they will not only work to alienate countries from our country, they will also work to disrupt Original Equipment Manufacturers’ (OEMs) worldwide supply chains.

Sure, U.S. manufacturer/suppliers may benefit temporarily as the tariffs make them more competitive, but history tells us that this benefit is only temporary and in the long run will reduce their ability to compete on a global basis. And, the point here should be to increase exports—not reduce imports—which is what tariffs do such as those currently in place on aluminum and steel are already doing.

Another fact to consider: Did you know that certain nations—some in the EU—buy Boeing products only because a portion of the purchased parts for those products are manufactured in their nation? I wonder how tariffs will affect that. It will certainly not make Boeing more competitive, and, if they do re-source to domestic manufacturers (which would take tremendous time and effort, as well as be very costly), what will happen to sales in those countries that lost the Boeing parts business?

I guess, as I said in an earlier article, “If you only know how to hammer, everything looks like a nail, and you pound and pound and pound and then wonder why it only makes some problems worse."

Paul Ericksen is IndustryWeek’s supply chain advisor. He has 38 years of experience in industry, primarily in supply management at two large original equipment manufacturers.